Question

1) What are the three principle domestic macroeconomic goals? Explain each.

2) What are the twp principal domestic macroeconomic policy instruments? Explain each.

3) What is the policy mix? Explain.

4) How can policy makers use their policy instruments to achieve their domestic policy goals? In your answer explain how macro-policy can be used to combat the problems of recession, overheating, and stagflation.

(I need help further understanding and going in depth about these topics, Thank You!)

Answer 1

1. The three primary macroeconomic goals are as follows:

1) Economic growth: A primary macroeconomic goal is to promote stable economic growth. Stable economic growth is essential for the improvement of the standard of living of people, increasing income and the overall development of people.

2) Low unemployment: When unemployment is high, the standard of living of people falls. Therefore, maintaining low unemployment is essential as a lower unemployment is the sign of a healthy economy.

3) Low inflation: Inflation erodes wealth of people. Therefore, even if the income of people is growing and people are employed, high inflation can reduce their purchasing power. Therefore, it is essential to maintain a low inflation rate.